2 export credit guarantees In the ﬁrst few months of the year, foreign trade slightly lost momentum, with German exports particularly feel- ing the effects of discussion on tariffs and trade barri- ers as well as the sustained political risks in key regions around the world. This presumably goes some of the way to explaining the greater demand for the German Federal Government’s export credit guarantees in the ﬁrst half of the year. There was a substantial increase in the number of applications as well as the value of the cover sought. As of 30 June 2018, applications worth a total of 18.6 billion euros had been received, up more than 50% on the same period in the previous year. Africa was particularly noteworthy, with exporters requesting aggregate cover of 1.32 billion euros for this region in the ﬁrst six months of the year. This is just under one billion euros more than in the same period of the previous year. This growth is also reﬂected in the value of the cover granted. At 551 million euros for Sub-Saharan Africa, it already reached the full-year lev- el seen in 2017. Whereas cover volume had previously been materially inﬂuenced by short-term cover under Wholeturnover Policies, guarantees were increasingly granted for individual transactions with medium and long-term payment terms in the period under review. Looking forward, demand for export credit guarantees will also hinge on the availability of sufﬁcient alterna- tive sources of funding in the private sector. Low inter- est rates and high market liquidity have also recently caused demand in government-supported cover to decline in the industrialised countries. By the same token, the risks prevailing in key foreign markets suggest that demand for export credit guar- antees will remain strong as the year progresses. The combined value of applications for single transaction cover and offers of cover stood at 44 billion euros as of 30 June 2018, i.e. well up on the same period in the previous year. The extent to which the transactions for which cover has been sought actually materialise cannot be forecast reliably as German exporters are exposed to heavy international competition. 8.1 billion The German Federal Government issued export credit guarantees worth 8.1 billion euros in the ﬁrst half of 2018. 77% More than three quarters of the cover provided was for the emerging economies and developing countries.
business performance In the ﬁrst half of 2018, the German Federal Govern- ment issued export credit guarantees worth 8.1 billion euros (H1 2017: 7.7 billion euros), equivalent to an increase of 6% over the same period in the previous year. Most of the deliveries and services covered were destined for the emerging economies and develop- ing countries. As in the previous year, they accounted for 77% of new guarantees issued. Repeating the situation in the previous year, the Unit- ed States contributed the largest volume of cover pri- marily due to cover provided for a cruise ship. Turkey, Russia, China, Brazil and Egypt, all traditionally impor- tant markets for Hermes-covered export business, also ranked highest in the list of countries in the ﬁrst half of the year. Financial result for the half-year Export credit guarantees generated a positive result of 249.5 million euros. 3 volume of new cover by country groups in billion eur 16.9 12.7 7.7 8.1 5.9 1.8 6.2 1.9 Emerging economies and developing countries Industrialised countries 4.2 H H top 10 markets for new guarantees as at 30.06.2018 in billion eur United States Turkey Russia R.F. China PR Brazil Egypt India Israel Ukraine Mexico H H 1.24 0.83 0.82 0.51 0.44 0.42 0.33 0.30 0.16 0.15 0.95 0.68 0.89 0.45 0.38 0.08 0.36 0.09 0.16 0.44 H1 2018 H1 2017 Subtotal as at 30.06.2018: (64%) 5.20 Total as at ..: (%) .
4 As in the same period of the previous year, single transaction policies accounted for 48% of the cover provided. Here, export credit guarantees for deliveries of goods and services on short pay- ment terms of less than one year rose by 25%, while the proportion of transactions with credit periods of between one and ﬁve years widened by 42%. At 2.9 billion euros, transactions with credit periods of more than ﬁve years were unchanged over the same period in the previous year. Cover under Wholeturnover Policies rose by 4.7%, accounting for 52% of the total. expenses In the ﬁrst six months of the year, the Federal Government paid indemniﬁcation of 150 million euros (H1 2017: 211.3 million euros). These pay- ments were almost solely for economic risks. At 27.7 million euros, Singapore accounted for the highest indemniﬁcation payments, followed by India (25.6 million euros) and Russia (20.6 mil- lion euros). regional distribution of newly granted cover (excluding industrial countries*) as at 30.06.2018 in million eur Europe ** Asia Africa America H1 2018 H1 2017 H H 1,985 2,028 1,086 1,104 1,878 2,123 439 1,468 Total as at 30.06.2017: 5,909 Total as at ..: , Industrialised countries: The group of industrialised countries includes the OECD premium category 0 countries, i.e. the OECD high-income countries (according to the World Bank definition, these are countries with per-capita gross income of more than 12,235 US dollars in 2017), the countries of the European Monetary Union including affiliated territories and Singapore. * ** European countries excluding industrialised countries: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, the former Yugoslav Republic of Macedonia, the Republic of Moldova, Montenegro, Romania, Russia R.F., Serbia, Turkey, Ukraine. guarantees by horizon of risk as at 30.06.2018 in billion eur Wholeturnover and revolving policies: Single transaction policies up to 1 year: Single transaction policies 1 - 5 years: Single transaction policies over 5 years: 4.2 0.7 0.2 2.9 Total as at ..: .* * Differences are due to rounding 36.4% 51.9% 3.1% 8.6% export credit guarantees for military goods in million eur H Type of goods Egypt 5.9 Towing vehicles for use at the airport apron Total H . * * Total H1 2017: 4.0 million euros
revenues as at 30.06.2018 in million eur 43.2% 40.3% 16.5% Amortisation and recoveries: Premium/fees earned: Interest received/ exchange rate differences: 309.2 126.6 332.0 Total as at ƒ..: ‡‡.‡* * Differences are due to rounding financial result in million eur 1,184 398 344 309 256 310 247 142 93 332 250 Interest received 214 Annual result excluding interest … ‡ H ‡ H revenues 5 Revenues from premiums and fees dropped by 6% to 126.6 million euros (H1 2017: 134.5 million euros). Recoveries of indemniﬁcation paid in the past climbed by 51% to 309.2 million euros (H1 2017: 204.7 million euros). Interest income increased by 35% to 332.4 million euros (H1 2017: 246.5 million euros). ﬁnancial result for the half year At 249.5 million euros in the ﬁrst six months, the result for the federal budget was substan- tially up on the same period in the previous year (H1 2017: 92.7 million euros). Interest income is not included in this calculation. outstanding risk The outstanding risk from current guarantees issued by the Federal Government stood at 84.3 billion euros as of 30 June 2018 and was 4% down on the year-ago ﬁgure (H1 2017: 87.8 bil- lion euros). The United States (10.9 billion euros), Turkey (8.8 billion euros) and Russia (7.9 billion euros) account for the highest outstanding risk.
6 development of the export credit guarantees Digital supplier credit cover: Hermes Cover click&cover EXPORT simplifying ﬁnance for small-ticket transactions On 1 July 2018, the Federal Government launched digital supplier credit cover for exporters known as Hermesdeckungen click&cover EXPORT. It is primar- ily targeted at small and mid-size enterprises (SMEs) seeking quick and uncomplicated cover for standard- ised export transactions valued at up to ﬁve million euros and with a payment period of no more than ﬁve years against the risk of politically or economically induced payment defaults. In addition, the Federal Government decided to extend the permissible horizon of risk for Credit Conﬁrma- tion Risk Guarantees from one year to ﬁve years. Both measures can make an important contribution to improving the scope for ﬁnancing small-ticket trans- actions. Detailed information on the digital supplier credit cover and credit conﬁrmation risk cover can be found here. Product innovation On 1 July 2018, the Federal Government launched digital supplier credit cover for small-ticket items. Hermes cover online Hermes Cover online: digital application setting new standards Digital application simpliﬁes process for requesting cover for exporters. Swift, simple and easy to handle: it has been possible for exporters to submit applications for supplier cred- it cover and manufacturing risk cover online since the beginning of the year. The digital application for single transaction poli- cies for exporters supports companies step by step in requesting cover. It shows which documents must be submitted, automatically checks the disclosures for plausibility and provides an immediate indication of whether the transaction is eligible for cover. Export- ers must register once free of charge on the customer portal in order to use the new application. Since the Compact with Africa Federal Government facilitating exports to Africa.
Country risk classiﬁcations: At its meetings held in January and June, the OECD experts reviewed various country risks. This resulted in the following changes: 7 oecd country risk categories – changes previously new Belarus Croatia Fiji Iran Oman Turkey 7 5 6 5 3 4 6 4 5 6 4 5 * From 6 to 5 in January, from 5 to 6 in June. Therefore no change compared with 31.12.2017. The new country classiﬁcations were duly adopted in the German cover system. They are used as a parame- ter in the calculation of the premium. introduction of the new system, roughly one quarter of all applications for supplier credit cover and manufac- turing risk cover have been submitted online. Starting in August, exporters can also submit digital applica- tions for all other forms of cover. Reduced uninsured portion: Federal Government facilitating exports to Africa The Federal Government has improved the scope of cover for selected countries in Africa so as to simplify export business in this region. The uninsured portion retained by the exporter or the ﬁnancing bank has been lowered from 10% to 5% for goods and services to public buyers in the “Compact with Africa” countries Côte d’Ivoire and Senegal. These arrangements also apply to Ethiopia, Ghana and Rwan- da provided that this does not affect these countries’ debt sustainability. Foreign trade ﬁnance: ECA-speciﬁc credit agreement facilitating contract drafting Working together with European legal and ﬁnancial experts, the Loan Market Association (LMA) has devel- oped a model contract for ECA-covered credit agree- ments (ECA = export credit agency). This marks the ﬁrst time that LMA standard contracts have been revised to include ECA-speciﬁc aspects, including for example the requirements arising from the OECD consensus for ECA-supported ﬁnance.
Dialogue event 2018: Important discussion platform for the further development of guarantee instruments 8 More than 300 exporters and representatives from banks and industry associations took part in the “Dialogue with the Business Community” event, which was held on 7 June 2018 at the Federal Ministry for Economic Affairs and Energy (BMWi). After opening speeches by Thomas Bareiß, Parliamen- tary State Secretary at the BMWi, Prof. Dieter Kempf, President of the BDI, and Dr. Marcus Chromik, a mem- ber of the Board of Directors of Commerzbank, the par- ticipants gathered in moderated workshops to discuss current issues relating to the further development of export credit and investment guarantees. Dialogue event More than 300 experts met to discuss current aspects of export credit and investment guarantees. Representatives of foreign companies were also actively involved in this event for the ﬁrst time. Enti- tled “An Importer’s View”, one workshop provided a refreshingly different perspective, illuminating aspects of government export credit guarantees from a foreign buyer’s vantage point. Nearly all the workshops dealt with recent digital developments in foreign trade and the challenges that these pose for guarantee instruments. A summary of the main content of the event on 7 June 2018 as well as a photo gallery can be found at the website of the Federal Ministry for Economic Affairs and Energy at www.bmwi.de/exportdialog2018. IMC away-day meeting in Lengerich This year’s away-day meeting took the Interministerial Committee for Export Credit Guarantees to Lengerich in Westphalia, where the headquarters of Windmöller & Hölscher are located. The company is one of the world’s leading suppliers of machines and systems for manufacturing and processing ﬂexible packaging. After its meeting, the committee took the opportunity to gain a ﬁrst-hand impression of the company’s strat- egy and production to better understand the needs of this industry.
The leadership function in the Interministerial Com- mittee, which has the underwriting responsibility for Fed eral Export Credit Guarantees, is exercised by the Federal Ministry for Economic Affairs and Energy: Bundesministerium für Wirtschaft und Energie Referat VC2 Scharnhorststraße 34 -37 10115 Berlin, Germany www.bmwi.bund.de The Federal Government has appointed Euler Hermes Aktiengesellschaft (Euler Hermes), Hamburg, to man- age the ofﬁcial export credit guarantee scheme. Further details, information, documents and advice on the opportunities offered by export credit guaran- tees and the applicable procedures can be obtained by contacting the Head Ofﬁce of Euler Hermes Aktien- gesellschaft in Hamburg or one of the branch ofﬁces. Extensive information material on the ofﬁcial export guarantee scheme, e.g. current editions of the AGA- Report, the General Terms and Conditions, application forms and information leaﬂets as well as the Annual Reports in English and German can also be accessed via Internet. You may request additional information material or raise your questions directly via e-mail. Editorial deadline: 30 June 2018 Date of publication: August 2018 9 Euler Hermes Aktiengesellschaft Export Credit Guarantees of the Federal Republic of Germany Postal address P.O. Box 50 03 99 22703 Hamburg, Germany Ofﬁce address Gasstraße 27 22761 Hamburg, Germany Phone: +49 (0)40/ 88 34- 90 00 Fax: +49 (0)40/ 88 34- 91 75 firstname.lastname@example.org www.agaportal.de berlin liaison ofﬁce Friedrichstadt-Passagen Quartier 205 Friedrichstraße 69 10117 Berlin, Germany Phone: +49 (0) 30/72 62 - 177 50 Fax: +49 (0) 30/72 62 - 177 76 email@example.com